India’s Multi-Tiered Engagement: Bilateral, Regional & Multilateral Strategies

ABSTRACT

The emergence of mega Regional Trade Agreements (RTAs) is reshaping the global trade architecture, affecting multilateral trade negotiations and geopolitical configurations. Economically, excluded countries will lose, particularly in areas of high trade integration, such as the Asia-Pacific. Although India has been a vocal supporter of multilateral trade liberalization under the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), it has also sought Free Trade Agreements (FTAs) at regional and bilateral levels. India’s evolving trade strategy is a balancing act between its adherence to international trade norms and the imperative to safeguard its economic interests in the wake of the emergence of trade blocs such as the Regional Comprehensive Economic Partnership (RCEP), the Trans-Pacific Partnership (TPP), and the EU-ASEAN Free Trade Agreement. This paper analyses India’s approach to trade negotiations in bilateral, regional, and multilateral contexts, balancing the implications of mega RTAs on India’s economic positioning and trade policy.

Keywords:  Regional Trade Agreements (RTAs), Multilateral Trade Negotiations, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT), Regional Comprehensive Economic Partnership (RCEP)

INTRODUCTION

India as the fifth-largest economy in the world and a major regional force has consistently played a pivotal role in global affairs, emerging as a significant player by demonstrating a proactive approach to engaging with international trade and diplomatic agreements[1] while striking a balance between home and international commitments. It has gained substantial advantages from WTO-driven trade liberalisation, which raised trade volumes and revenue. To strengthen regional cooperation, stress its position in multilateral forums, and increase its economic and geopolitical impact, India has adopted a flexible and pragmatic negotiating approach.

India has mainly concentrated on bilateral (between two nations) and regional (between several neighbouring countries) trade agreements in addition to the WTO. This change came into effect during Prime Minister Narasimha Rao who implemented the Look East Policy in 1991, which promoted closer trade relations with East Asian nations.

India has an active trade agreement with around 15 and still negotiating with 14 more[2]. However, it is still believed that it mostly focuses on the trade of physical goods and does not fully cover trade in services such as banking and IT part. The deeper elements that are typically included in modern trade agreements to assist nations in participating in global supply chains are absent from India’s agreements.

The fact that many Indian companies do not properly utilise Free Trade Agreements (FTAs) is another problem.  Research indicates that just 27% of companies utilise free trade agreements (FTAs) for several reasons such as complicated rules, lack of awareness, and high compliance costs[3].

Meanwhile, the WTO’s Doha Round of international trade negotiations has stalled, prompting nations to create their regional trade blocs. Dominant economic blocs such as the Trans-Pacific Partnership (TPP) and EU-ASEAN Free Trade Agreement establish their trade norms, making it increasingly difficult for developing nations such as India to follow.

India has not yet become a part of these larger trade groups, but it is in talks to be a member of the Regional Comprehensive Economic Partnership (RCEP) comprising nations such as China, Japan, and Australia. Meanwhile, India continues to promote world trade negotiations through the WTO. The “multi-track trade policy” enables India to keep regional trade partnerships as well as world trade negotiations open.

India’s Policy Towards Trade Negotiations

India pursued Doha Round trade negotiations aggressively and built high-pressure on developed countries on essential areas, i.e., agriculture and non-agriculture market access, to attain greater economic growth through trade reforms[4]. However, the sluggish progress under Doha and follow-up rounds encouraged India to seek alternative avenues to ease its

economic integration with the world economy. Likewise, the liberalisation of trade in services under the General Agreement on Trade in Services (GATS) of WTO has failed to gain momentum because of a lack of advancement on important issues, including mutual recognition agreements (MRAs) and recognition of qualification of education for the free movement of professionals. The 14-year-old sleepwalking Doha Round was not able to spearhead the general agenda of trade liberalisation, under the umbrella of WTO.

Consequently, most countries opted to pursue the path of regionalism to speed their economic development. India also followed the same route and pursued the path of regionalism and bilateralism aggressively but the India-US and EU rivalry has finally come to an end with the Trade Facilitation Agreement agreed on ratification at the Brisbane G20 summit in 2014.[5]

This has reignited a lot of hope for the multilateralism progress of several developing and least developed nations (LDCs).

India’s Approach towards

Bilateral and Regional Trade Negotiations

India is following different types of strategies while negotiating trade agreements at bilateral, regional, and multilateral levels. Over the years, India has been refining its approach to Free Trade Agreements (FTAs) based on changing economic priorities and expertise.

Different types of Phases followed India’s FTA Strategy-

• Initial Phase – Trade with Developing Countries & Neighbours

Where India initially entered into FTAs with developing nations and least-developed nations to enhance South-South cooperation (trade between developing countries).

Examples:

• Asia Pacific Trade Agreement (APTA) – A trade agreement among Asian countries.
• Global System of Trade Preferences (GSTP) – A trade pact among developing nations.
• South Asian Free Trade Area (SAFTA) – A regional trade agreement among South Asian countries.

India also entered into trade agreements with the neighbouring countries of Bhutan and Nepal, granting them special trade concessions like transit rights and market access.

• Expansion Phase – FTAs with Advanced Economies

Taking a cue from past trade agreements experience, India went beyond its limited economic relationships with industrialized countries through:

India-Japan CEPA

India-Korea CEPA

India-ASEAN FTA

India-Singapore CECA

These strategic pacts contained:

1. Trade in merchandise and services

2. Regulation on foreign investments

3. Government purchasing guidelines

4. Anti-trust measures

5. Trade facilitation provisions

• Current Phase – Deeper Economic Integration

India is now negotiating FTAs with highly developed countries, such as:

1. India-EU Free Trade Agreement (FTA)

2. India-Australia Comprehensive Economic Cooperation Agreement (CECA)Regional Comprehensive Economic Partnership (RCEP) (India withdrew due to concerns over trade imbalances)

3. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

India’s Approach Has Changed Over Time from Simple to Comprehensive Agreements. Earlier FTAs (e.g., India-Korea CECA) focused only on tariff reductions (lowering import duties). Recent agreements include wider areas such as investment protection, trade in services, e-commerce, and competition policies.

Focus on Investment & Foreign Direct Investment (FDI)

• India’s FTAs with Japan, South Korea, and Singapore aim to attract more foreign investment and integrate with ASEAN’s production network (a supply chain linking Southeast Asian economies).
• India’s strong services sector (IT, healthcare, skilled professionals) gives it a trade advantage in countries like Japan and Malaysia, where there is a shortage of skilled workers.

Problems in Implementing FTAs

• India has been cautious in signing FTAs due to:

some sectors anticipate greater competition from lower-cost imports (e.g., resistance by Kerala’s rubber and palm oil farmers during India-ASEAN CECA talks).

• Regulatory and institutional hurdles are found in sectors such as manufacturing and agriculture.

India’s bilateral and regional trade policies continue to evolve with an ongoing learning-by-doing policy. India, however, from its initial focus on goods trade, is gradually shifting to services, investments, and greater economic cooperation. India will, however, need to balance economic benefits with national interests such as the protection of the home industry and retaining regulatory authorities.

Multilateral Trade Negotiations

You can understand well before entering India during the multilateral trading period.

Economic and commercial reform. India’s location in the Uruguay Round (ur) secured the UR objectives and it strongly reinforced the issues of implementation raised by several developing countries[6]. India’s approach to the WTO was calculated and focussed

on protecting its domestic interest in the initial years of the UR negotiations, considering its legacy of protectionist policy regime post-independence[7].

Economic and trade reforms of the 1990s brought a major change in India’s trade policy and it started on a path of aligning its trade policy stance with the core disciplines of the WTO.

Due to which, India reduced significant amounts of its tariff rates by adopting unilateral trade liberalisation in manufacturing goods.

India’s stance at the WTO varies with the subject at hand due to its national position and political compulsions. India has always stressed special and differential treatment (S&DT) to meet its internal development issues, specifically agriculture. In the non-farm market access context, India has never stressed that developed countries offer less than full reciprocity in commitment reduction on the part of developing countries.[8]

On services, India requested greater market access through a higher level of trade liberalisation of service trade for Mode-1 (cross-border supplies) and Mode-4 (movement of individual clients) to achieve an equal result on commitments between more than one service. In past trade negotiations, it has been observed that India’s policy has deviated a bit from Mode-4 to Mode-1 and Mode-2. This is largely due to technological advancements that have made professional mobility less important, but increased the importance of cross-border services and services are invested in (Mode-3). In addition, the increasing cost of labour and skills deficit has imposed domestic pressure on liberalizing Mode-1 and Mode-2.[9]

From the above, one can see that India has pursued a multi-track policy to boost its economic interdependence with the global economy. India’s bilateral, regional, and guided primarily by national interests by multilateral trade negotiations both economic and political, i.e., subsidizing its enormous low-income population and responding to constituency groups and political parties.

But the wave of mega RTAs now in the pipeline and their probable economic impact could generate, aside from such reactionism in foreign affairs, there are severe supply and demand imbalances of such key products by preference erosion or diversion of trade on India’s economy. Due to the role of domestic economic and political considerations in India’s foreign trade policy, the potential effects of mega RTAs on the Indian economy will be extensive for India’s bilateral, regional, and multilateral diplomatic trade negotiations.

Challenges and Restraints in India’s Trade Negotiations

India is faced with a number of internal and external challenges that impact its ability to negotiate and implement trade agreements efficiently.

1. Internal Challenges

• Bureaucratic Barriers – Inefficient regulatory procedures and sluggish decision-making processes impede trade negotiations and implementation.
• Coordination Problems – Different ministries and interest groups (industry, services, agriculture) typically have different agendas.
• Resource Constraints – Insufficiency of institutional capacity and experience in handling new issues of trade such as digital trade, data regulation, and climate-change-related trade policy.

2. External Challenges Geopolitical Rivalries – India’s foreign trade policy is shaped by regional tensions, i.e.:

• China-Pakistan axis – China’s growing economic influence and Pakistan’s resistance to collaborate on trade pose challenges.
• RCEP Withdrawal – India withdrew from the Regional Comprehensive Economic Partnership (RCEP) because of fears of China’s hegemony and market access.
• Global Trade Wars & Protectionism – US-China trade war and rising protectionist policies of developed countries impact India’s exports and FDI inflows.
• Shifting Global Power Dynamics – India’s trade relations with major powers like the USA, EU, China, and Russia require careful balancing, especially amid global economic uncertainties.

3. Balancing Act

India has to manage relations with rival powers tactically while protecting national interests:

• USA vs. Russia – Close economic ties with the USA for technology and defence, but Russia as a strategic energy and defence ally. USA and China – Building trade with the US and allies and less dependence on imports from China.

Future Outlook: India as a Global Trade Leader (“Vishwaguru”)

India has the potential to be a global leader in economic diplomacy and trade diplomacy with its huge market, educated population, and strategic position in global supply chains.

1. Opportunities in Emerging Sectors

Digital Economy – Building cross-border e-commerce, fintech, and data services.

Green Energy & Sustainability – Solar power leadership, electric cars, and carbon-zero technology.[10]

2. Policy Suggestions to Promote Trade Negotiations

• Building Institutional Capacity – Streamlining trade negotiation structures and improving inter-ministerial coordination.
• Domestic Industry Strengthening – Giving sector-specific support to industries such as pharmaceuticals, IT, and alternative energy to enhance global competitiveness.
• Strategic Regional Alignments – Active engagement in the Indo-Pacific regional trade agreements and deeper trade ties with Africa, Latin America, and ASEAN.
• Data & Digital Trade Policies – Creating effective policies on data localization, cybersecurity, and AI-driven trade. Balancing Economic & Strategic Interests – Maintaining a flexible position in trade negotiations while safeguarding important domestic industries.

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[1]  Amit Shovon Ray and Sabyasachi Saha, India’s Stance at the WTO: Shifting Coordinates, Unaltered Paradigm, Centre for International Trade and Development, 2009

[2]  Department of Commerce, India, 2014, http://commerce.nic.in/trade/international_trade_rta.asp. Asia Development Bank, Free Trade Agreements by Country: India, http://aric.adb.org/fta-country

[3] 3The Economist Intelligence Unit, FTAs: fantastic, fine or futile? Business views on trade agreements in Asia, 2014

[4] Suparana Karmakar, Rulemaking in Super RTAs: Implications for China and India, 2014

[5] Geethanjali Nataraj et.al, The Changing Global Trade Regime and Emergence of Mega FTAs, 2015

[6] Ray, Amit Shoovan, ‘Shaping the Coordinates of India’s Trade Policy Architecture: Domestic versus International Drivers’, ISAS Working Paper, No. 126-21, April 2011

[7] Ibid

[8] Suparna Karmakar, Political Economy of Trade Negotiations : Economic Significance of FTAs, European Trade Study Group

[9] Ibid

[10] https://www.trade.gov/country-commercial-guides/india-market-challenges